Aggressive loan terms drive concerns on recovery rates

Fiscal stimulus and economic growth should keep the credit cycle going for another two years, but the weakening of investor protections will damage loan recoveries when the market turns, said panellists at an IMN investors’ conference on CLOs and leveraged loans on Wednesday.

By David Bell

23 May 2018

“The docs today do not provide at all the type of comfort that a senior lender could have pre-crisis,” said Farboud Tavangar, senior portfolio manager at LCM Asset Management. “The ability to bring the borrower to the table is not there. Subordinated capital has vanished. Leakage is allowed
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